In Michigan, every employer who has three or more employees, at any one time, or employs one or more workers for 35 or more hours per week for 13 or more weeks, is required to carry workers compensation insurance. Except:
1. Agricultural employees are exempt under certain special circumstances, however agricultural employers may voluntarily cover their workers. (WCxKit)
2. Self-employed people do not have to have work comp insurance for themselves, but are required to have work comp insurance for their employees.
3. Partners and corporate officers can elect to exclude themselves from work comp insurance coverage.
Michigan employers have several options when purchasing workers comp coverage:
1. Purchasing an insurance policy from a private insurance company.
2. Qualifying as an approved self-insured employer.
3. Joining a group of other small employers in the same trade organization to form a group self-insurance plan.
The employee is required to report the injury to the employer within 90 days of the occurrence or within 90 days of the employee knowing an injury has occurred (90 days of learning of an occupational illness). The employee must also make claim for compensation benefits within two years of reporting the claim. If the employee fails to give notice, the claim cannot be denied on the failure to report the claim unless the employer can show it was harmed due to the failure to report the claim timely.
The Workers Disability Compensation Act requires the employer/insurer to pay for all reasonable and necessary medical care. This includes all medical, surgical and hospital services plus dental services, chiropractic care, nursing services, hearing apparatus and crutches. The employerselects the initial medical provider. After ten days the employee is free to change doctors if the employee wishes to do so. If the employee does change doctors, the employee must notify the employer of the change in doctors.
Temporary Total Disability Benefits:
The temporary total disability (TTD) wage loss benefits are calculated at eighty percent (80%) of the after tax value of the wage loss. The employee's average weekly wage is based on the highest 39 weeks of the last 52 weeks prior to the injury. The maximum amount that can be paid per week is 90% of the state average weekly wage.
The maximum amount of TTD wage loss benefits that can be paid weekly changes every January 1st. The maximum TTD benefits per week for accidents occurring on or after January 1, 2010 is $746.00 per week. For accidents on or after January 1, 2011, the maximum amount is $742.00 (the state average weekly wage has declined over the last year). Michigan has no set amount as the state minimum weekly benefit, except in case of a specific loss as defined in the Workers Disability Compensation Act.
The first 7 days of disability (the waiting period) is not paid to the injured employee unless the employee is disabled for more than 14 days. TTD benefits are paid for as long as the employee remains classified as disabled. A unique law to Michigan is the TTD benefits are reduced 5% per year starting when the employee turns 65 years old. The 5% reduction continues each year until the employee is 75 years old and is receiving 50% of the TTD benefit. The 5% per year reduction in benefits applies only if the employee is receiving social security benefits as well.
Michigan does not have temporary partial disability benefits as a category of benefits like most other states. However, if the employee is returned to work making less than the wage the employee was earning before the injury, 80% of the after tax wage loss is paid to the employee as TTD for as long as the employee is earning less than what would have been earned if the injury had not occurred. (WCxKit)
Specific Loss Benefits:
Specific Loss Benefits are paid to the employee over and above any disability benefits when the employee losses an arm, hand, finger, thumb, leg, foot, toe, or eye. (Hearing losses are only compensable if they result in a loss of earnings). Each body part is listed on a specific loss chart and is equated to a set number of weeks. For example, a thumb is worth 65 weeks of wage loss. A complete loss of the thumb for an employee with a wage loss benefit of $500 per week would be $32,500 (65 X $500). If the same employee suffered only a 20% loss of use of the thumb, the specific loss benefit would be $6,500 (65 X $500 X .20). A specific loss benefit is not calculated the same way for a low earner. The low earner's specific loss benefit would be calculated on 25% of the state average weekly wage if the 25% of the state average weekly wage were higher than the employee's 80% of after tax wage loss..
Total and Permanent Disability Benefits:
Total and permanent disability is defined under Michigan law as:
1. Total and permanent loss of sight of both eyes, or
2. Loss of both legs or both feet at or above the ankle, or
3. Loss of both arms or both hands at or above the wrist, or
4. Total loss of any combination of any two body parts of eye, leg, foot, arm or hand, or
5. Permanent and complete paralysis of two arms or two legs or 1 leg and 1 arm, or
6. Incurable insanity or imbecility, or
7. Permanent and total loss of industrial use of both legs or both hands or both arms, or 1 leg and 1 arm, and the permanency must be established not less than 30 days before the 500 week anniversary of the claim.
The term “loss of industrial use” is often used by the attorneys for injured employees in an effort to collect total and permanent disability benefits. The classification of total and permanent disability is sought as the benefits for total and permanent disability pay more than the TTD rate. The injured worker who is permanent and total disabled is allowed to take advantage of the annual changes in indemnity benefits rates while employees who are collecting TTD benefits do not get annual adjustments to their indemnity benefit. Also, the low earner will receive not less than 25% of the state average weekly wage, where there is no minimum benefit for employees who are collecting TTD benefits. The additional benefits over and above the TTD rate is paid by the Michigan Second Injury Fund, not by the insurer, and are called differential benefits.
When an employee dies as the results of a worker' compensation injury, there must be a dependent for wage loss benefits to be paid. Only children of the deceased employee are considered dependents by law. The spouse must prove that they were in fact a dependent of the employee. If the spouse is only partially dependent on the deceased employee, the spouse will receive a reduced death benefit.
The amount of death benefits is 80% of the after-tax wage loss, but not less than 50% of the state average weekly wage. (The death benefit could be higher than the employee's wages if the employee was a low wage earner). The maximum that can be paid out in death benefits is $322,000. There is also a $6,000 burial benefit.
The maximum amount of time a spouse of a deceased employee can collect death benefits is 500 weeks. If the injured employee survived for a period of time before dying from the injury, the 500 weeks is reduced by the number of weeks previously paid to the employee. The 500 weeks of benefits limitation does not apply to children or to dependents who are physically or mentally incapacitated.
Vocational Rehabilitation Benefits:
If due to the employee's on-the-job injury the employee is unable to return to work because of the injury, the employee can be retrained to perform a different job for the employer or retrained to perform a different job for another employer. The employee is required to participate in the vocational rehabilitation. If the employee does not cooperate with vocational rehabilitation, the indemnity benefits can be terminated.
NOTE: State laws change frequently. Nothing in this article is meant as legal guidance. For legal advice on a particular state's most current law, please consult with you legal adviser.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: RShafer@ReduceYourWorkersComp.com or 860-553-6604.
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